Book Review (Combes et al. 2008)

Image of the cover of Economic Geography: The Integration of Regions and Nations

Economic Geography: The Integration of Regions and Nations

Pierre-Philippe Combes; Thierry Mayer; and Jacques-François Thisse

2008, Princeton University Press: Princeton and Oxford; 399 pages, ISBN: 978-0-691-13942-5.

Reviewed by Vítor Braga – Escola Superior de Tecnologia e Gestão de Felgueiras – IPP; CIICESI; CETRAD (29 July 2009)

Economic geography, as a field of study, has, over the last years, received increased attention from academics and has contributed greatly to the development of policies. Although there are different approaches, mainly in what one regards as its methods and applications, a very important role is played by spatial economics. This book reflects on the most prominent topics in spatial economics, with a spectacular versatility in terms of the concepts covered. The book provides both a theoretical and empirical contribution, thus fulfilling the needs of different audiences – the academic, the policymaker, the practitioner. The objective of the book is mostly to address the role of distance in the economy, and, as acknowledged by the authors a belief that there exists “a new element specific to economic geography: the fact that, in all places, what is near has more influence than what is far” (p. xiii) .

In analysing the role of places in economic activity, the region is the basic unit of analysis, but the authors clearly reflect on region’s natural endowment of resources and the impact that human action has on the nature. At a general level, it addresses the interaction between agglomeration and dispersion forces, using the interplay between trade costs and increasing returns while the authors also tackle the issue of globalisation given the nature of the methodology employed. Specifically a macroscopic scale on the research allows the extension of the research to the international level, by considering countries as regions. In fact, the difference between countries and regions is basically a matter of political organisation, where often there are no limits in terms of culture or language, and more importantly regarding this book, in terms of endowment of natural resources, and distances. Therefore, when analysing a set of countries one is basically analysing a number of regions and how the economic activity takes place across these regions.

Acknowledging that transport costs are key to the study of the geographical concentration of activities, distance still plays a great role, even in the context of globalisation. In addition, in a reflection on the role cultural and social settings, distance is again an important factor. Although the cultural distance does not necessarily have to be related to the physical distance, it is common that regions in close proximity share more of the same culture. Similarly, it is also common that proximity implies a similar endowment of resources (or at least similar resources).

The first 7 chapters approach theoretical models of economic geography developing the basic concepts of economic geography and allowing students to learn about the advanced concepts and models on economic geography. An historical perspective is also provided in chapter 1, where the role of transport costs is analysed over the period subsequent to the industrial revolution. The chapter presents stylised facts regarding the formation of economic spaces. It places a special emphasis on the role of transport costs in the agglomeration of activities and on the levels of income and productivity. This chapter serves to introduce the remaining chapters, devoted to the examination of facts and theories, such as the core-periphery models, spatial competition, the home-market effect and location of firms, spatial concentration and local productivity. This book contributes with new assumptions and new techniques to the development of existing models on these topics.

A different perspective of Economic geography is provided in the latter parts of the book (chapter 8 onwards). The latter part of the book is characterised by the development of applications of traditional economic geography models, and represent a deeper analysis of the existing theories. To that end, these chapters can be seen as extensions of the models on economic geography and show a deeper analysis of economic geography because the authors “dig deep” into the models, questioning their assumptions and changing mathematical modelling techniques underlying these models. But, moreover, the topics developed in the book can also be applied to a large number of other disciplines/subjects, such as international trade (or economics); development economics, applied econometrics, and industrial organisation.

Within the book a combination of chapters can be used to support teaching, however, a number of chapters take a more scientific approach which is less conducive to being used in teaching but more conducive to research. This ensures the versatility on offer and coherence of this book constitutes a great reference for both students and researchers. The book delivers important insights into the theories and practices of economic geography and opens opportunities for new avenues of research, by providing extensions of the existing theoretical models which can form the basis of new applications and tests to these theories.

In light of this versatility, this book is highly recommended for both academic and graduates. The book does, however, lack some insights that can be used by practitioners and policy makers. There is a great role played by factors that are difficult to model, but still impact greatly in the explanation of the distribution of economic activity. This is mostly contributed by the New Economic Geography, and more specifically by Institutional Economics and Economic Sociology. Although these insights are based on a different approach in terms of methodological approach, they also contribute to the explanation of the same phenomenon. A fully comprehensive approach of the study of geographical agglomeration would need to balance the mix of these different approaches. This mix could contribute substantially to provide a more accurate description of the factors behind agglomeration and industrial location that could be particularly useful for policy makers.

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